Chapter 8 Key terms

Question	Answer
Breakeven Point	Point at which seller has covered all expenses and costs and has made no profit or suffered a loss
Contribution Margin	Difference between selling price and variable cost.
Cost	Price retailers pay to manufacturer or supplier to bring merchandise into store.
Dollar markdown	Original selling price less the reduction to price. Markdown may be stated as a percent of the original selling price. Example: Dollar markdown/original selling price
Dollar Markup	Selling price less cost. Difference is the amount of the markup. Markup is also expressed in percent.
Fixed cost	Costs that do not change with increase or decrease in sales.
Gross Profit	Difference between cost of bringing goods into the store and selling price of the goods.
Margin	Difference between cost of bringing goods into store and selling price of goods.
Markdowns	Reduction from original selling price caused by seasonal changes, special promotions and so on.
Markup	Amount retailers add to cost of goods to cover operating expenses and to make a profit.
Net Profit (Net Income)	Gross Profit - Operating expenses
Operating Expenses (overhead)	Regular expenses of doing business. These are not costs.
Percent markup on cost	Dollar markup divided by the cost; thus markup is a percent of the cost.
Perishables	Goods or services with a limited life.
Selling Price	Cost plus markup equals selling price
Variable Cost	Costs that do change in response to change in volume of sales

Resource summary

	Created by Katrina Smith about 2 years ago